If there is no innovation you wouldn’t even be able to launch your business venture, leave alone survive and thrive in the competitive marketplace. But innovation by itself won’t make you a successful entrepreneur unless you understand how to apply it in the right manner. Thus, in this article I shall share with you 5 tips for leveraging innovation for successful entrepreneurship, I call them the 5 gears of your innovation engine.
Turn Ideas into Money
Innovation is turning ideas into money, that’s probably the best definition of innovation that I can think about, simply because it’s practical. At least as an entrepreneur the principal motivation behind innovation should be money because if you can’t turn your ideas into money your enterprise would definitely fail. There might be several reasons why ideas may fail to turn into money but there are three that strikes me the most. Strike One, Novelty, either your ideas lack novelty completely or else they are too ahead of time.
Novelty could be in the product or service itself or in your business model or your marketing strategy. If you are just copying someone else’s idea without bringing in any innovation from your side, your enterprise is bound to be doomed even before it can take off. You also need to be careful about how innovative you want to be, because you might end up with something that is way ahead of its time and nobody would want it. There needs be a demand or at least the possibility of creating one for your venture to be a success.
Strike Two, Feasibility, your ideas should be agile enough to be quickly and easily built into successful products or services that customers would want, they should be able to be industrialized to scale to customer demands, they should be flexible enough to be customized or personalized to customer requirements and extendible to be improved and be able to evolve with time and changing needs.
Strike Three, Non-obviousness, if your ideas are too obvious, they can be easily copied or duplicated by competitors which would put you out of business well before you could even recover your investment. A few things to remember, innovation can be expensive if you have to acquire technology and skills. The most cost-effective way is to learn the skills and build the technology yourself.
There is always some risk with innovation but you can mitigate it by doing some solid ground work, basing your project on proven research and leveraging existing mature solutions to put it together. Having a highly knowledgeable and experienced subject matter expert on your team would also help a great deal in making your project successful while reducing risks and unnecessary costs.
Turn requirements into needs
Requirements and needs are two totally different concepts in the minds of your customers. Requirement is something that is a must to have while needs are ones that would be nice to have. Requirements are important and urgent while needs might be dreams, desires, wishes or wants. They can survive without their needs but they cannot live without fulfilling their requirements. They do understand perfectly well what they presently require but seldomly know what they need or will need in the future. If your products or services are based on their present-day requirements it most probably won’t be innovative enough to succeed because some way or the other, they are already fulfilling their requirements today.
You would just be providing them with another option, then at least try to provide them a better, improved, optimized or evolved alternative that might interest them or make their life easier. But the real magic of innovation lies in understanding what your customers require and then turning these requirements into needs. Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses”. It seemed that the people’s requirement was faster horses but reading between the lines what they really required was a faster means of transportation. Thus, Henry Ford introduced them to an automobile which fulfilled their requirement for faster transportation while being a novelty of its time.
An innovative product they had never dreamed about but which made their lives easier and became their need over time. Thus, he managed to turn their requirement into a need, can you imagine your life without an automobile today, whether it’s your personal car or a public transport like taxi or passenger bus.
Focus on your Customer
By building your business based just on the inventory of what you are good at and then extending out from your skills, you could run the risk of not meeting your customers’ requirements, let alone their needs. The best way is to start with your customers by determining what they require and then work backwards. However, don’t try to assume what they require, instead listen to them, understand their requirements and empathize with them. But don’t listen too hard either because like I mentioned earlier, they seldomly know what they need.
Customers generally determine value based on three principal elements; requirement, experience and price. Your product or service should of course have the functionality necessary to fulfil their immediate requirements or should be ingenious enough to create a need based on perceived requirements. It is also important that you focus on an innovative experience to provide your customers while fulfilling their requirements. Faster horses might have fulfilled the requirements of people in Henry Ford’s time but with literally no improvement on the experience side. There are several ways to skin a cat but to be successful you need to be able to dream of the most innovative way and one which will improve experience as well, like Henry Ford’s car as compared to horses.
Finally, the price has to be reasonable as well, mind you I am not saying cheap, I am saying reasonable for the functionality and experience it provides. Henry Ford’s dream was to deliver an automobile to every American family’s doorstep and he fulfilled it because although he didn’t invent the automobile, he did manage to manufacture and sell automobiles which were affordable for his customers. I doubt his automobile was cheaper than the faster horse’s alternative, probably not, but it was faster than the customer’s requirement and definitely a much more comfortable experience. The product provided a value which was beyond the customers’ expectations so the price was perceived to be reasonable.
Create a Wow effect
Just trying to meet customer requirements isn’t enough either because you might be falling short on providing an experience your customers are looking forward to. In Steve Jobs words, “You’ve got to start with the customer experience and work backwards to the technology”. Think about all the incredible benefits you can give to your customers and where you can take them. Although this approach might require learning new skills, it would definitely help you build an innovative, interesting and satisfying experience that your customers will like and want. But you could also try to go a step further by delivering experiences beyond your customers wildest dreams by creating a wow effect. Can you imagine the look on people’s faces when they saw Henry Ford’s automobile for the first time? Best innovation normally take place on both levels, the functionality and the experience level. Smart phones are a perfect example where we can see how novel functionality along with an exceptional experience can result in addictive products and behavior which can transform the industry and the society itself. Innovation without experience is normally doomed for failure, one great example is Blackberry, plenty of technological innovation through their Research in Motion program but literally no impact on experience. The other way around does work sometimes, for example product launching of the first iPhone was totally based on a unique customer experience with most of the innovation focused on it. What made the difference was the wow effect it created, which in turn created a need that didn’t exist previously and price suddenly wasn’t a limitation anymore. People buy some smart phones and automobiles at exorbitant prices today; they have turned into vanity and status symbols. Thus, you can see that price is relative to value and needs can be created.
Never stop Innovating
Last but the most important tip that I would like to mention here is about continuous innovation. To stay in business, you need to keep innovating and there are several examples of those who didn’t and went out of business. Talking about innovation I would like to first break one important myth; most people get confused between innovation and invention and some even believe it’s interchangeable. However, innovation is not invention, innovation involves the creation of new ideas and the combination of existing ideas, to deliver new and/or improved products or services. Quoting Henry Ford once again, “I invented nothing new. I simply assembled into a car the discoveries of other men behind whom were centuries of work”.
Too often, people get caught up in the idea of inventing something totally new because we have been repeatedly told to “think outside the box” rather than trying to put old things together in new ways. Innovators are brilliant at recognizing how ideas they have seen before in another context or industry could be brought forward. If you are planning to enter any particular industry, firstly study and understand the trends within that industry to be able to build an attractive and interesting use case to implement into a product or service. Secondly look out for disruptive technologies and try to leverage them in your project, it will help you build innovative solutions. But please don’t compete in overcrowded industries it’s not sustainable for high performance since you will be competing over the same factors that the industry has been competing on forever, market space and price.
The real opportunity lies in creating uncontested market space. Work on a value innovation strategy to lift buyer value by raising factors which are way below industry standards and creating factors that the industry has never offered before while saving costs by reducing factors that provide little value and eliminating factors the industry competes on. This will allow you to open a wider market, create new demand and generate revenue while making the competition and price irrelevant. Cirque du Soleil is an outstanding example of how you can transform even a declining industry.
They did this by eliminating unnecessarily expensive and sometimes conflictive factors like Star Performers and Animal Performers that the industry had been competing on while creating new factors brought forward from the entertainment industry like Theme and Artistic Music & Dance which the industry had never offered before. Interestingly they did not compete with traditional circuses by taking customers from the already shrinking demand for the circus industry, which historically catered to children. Instead they created uncontested new market space that made the competition irrelevant. They appealed to a whole new group of customers, adults and corporate clients prepared to pay a price that is several times as expensive as traditional circuses for their unprecedented entertainment experience. But one thing that you should be very careful about is not falling in a competency trap.
Many have made this mistake by focusing on trying to improve factors that were already good enough and the customers didn’t really care about. They thought that they were doing continuous innovation just like Black Berry who spend millions of dollars on improving their operating system which was already state of the art at that time, building stringent security features etc. which most people didn’t care about. John Maynard Keynes very truly said, “The difficulty lies not so much in developing new ideas as escaping from old ones”.
Concluding this article, I would like to summarize that for successful entrepreneurship you have to be innovative. However, your innovation should have lucrative results, it should be based on creating needs, focusing on the customer, have an impactive effect and most importantly your innovation should never stop or end else most probably your enterprise will end with it as well. I hope my tips help you build a highly innovative and successful enterprise. All you have to do is turn on your innovation engine and move on by shifting gears. God Speed!